Impact of floods on textile industry of
by Dr. H.R. Sheikh, Professor
Emeritus, Textile Institute of Pakistan.
Forum at Federation House at Karachi deliberated on the
impact of floods on the textile industry of Pakistan. PTJ is
pleased to reproduce some of the questions raised at Forum
on the “Impact of Floods on the Textile Industry” and find
answers to the following questions:
How much damage
has been inflicted on the cotton crop by the recent rains
What would be
the effects on Pakistan’s exports and especially on
are under consideration in economic policies and plans?
should be taken by the Government to rehabilitate cotton
What is the
importance of textile industry in the economy of Pakistan?
of the industry participated at the Jang Forum: Dawood Usman
Jhkora, Vice-President FPCCI, Mirza Ikhtiar Baig, Adviser
Textile GoP, Chairman Baig Group of Industries, Yunus
Khamisani, Former Chairman North Karachi Association of
Trade and Industry and Asif Inam, Vice Chairman APTMA. Views
of these industrialists are briefly reported as follows:
Cotton crop damage
Cotton Crop in Punjab has not been affected much by the
rains. However, about 35% to 40% of the Cotton crop has been
damaged in Sindh.
The official estimate of expected cotton production was 15
million bales comprising of 10.5 million from Punjab and 4.5
million from Sindh. Assuming cotton production of Sindh at
approximately 2.5 million bales, total cotton production is
likely to be about 13 million bales this year 2011-12. The
Spinning Sector of the textile industry of Pakistan consumes
approximately 14 million bales of 375 LBS (170 KGMS) each
annually. Consequently, at least 1.0 million bales will be
needed to meet the requirements of the spinning sector.
The Government of Pakistan allows “Free Trade Policy”, and
cotton can be exported as well imported duty free in Pakistan.
Hence shortage of cotton production due to floods and rains will
not create problems for the textile industry. However, the
reports of damage to cotton crop can escalate cotton prices. The
massive floods of summer 2010 resulted in escalation in cotton
prices from Rs 7150 per maund in October 2010 to Rs 12,500 per
maund in March 2011. Similarly recent floods and rains have
damaged 35 to 40% of the cotton crop in Sindh! Cotton prices of
Base Grade have escalated from Rs 5,500 per maund to about Rs
6500 per maund.
In order to improve the cotton production capability of
Pakistan, USA will provide US $ 9 million aid during the 3 year
period from 2010 to 2012 in three instalments.
Effects on total exports
In order to achieve the target of US $ 25 billion total
exports from Pakistan serious efforts are being by the concerned
departments of the Government of Pakistan (GoP). For example,
- Duty free exports of garments to China Free Trade
Agreement FTA (second phase) is expected to be signed in 2012,
- Others measures, such as preferential Trade Agreement
(PTA) will be signed by GoP with Turkey for withdrawal of
anti-dumping duty on garments and fabric exports from
Pakistan. WTO rules prohibit imposition of anti–dumping or
local protective duty on exports of products from country
which has PTA with the importing country.
- European Union allowed exports of 75 products duty free
Pakistan. However facility was withdrawn because of objections
raised by India. GoP has taken up the issue with the Indian
Trade Promotion Bureau (ITPB).
During his recent visit, Anand Sharma, Indian Commerce
Minister, said, “an array of legal and regulatory barriers has
restricted official exchanges to $2.7 billion but he is hopeful
that the sum would jump in the coming years. We hope to double
this figure in a three-year period. Once direct trade through
(the) land route is facilitated, there will be a manifold
At present, Pakistan maintains a list of 1,945 items allowed
to run from India to Pakistan, only 108 of which can be
trafficked directly by road through Wagah. Pakistan granted
India ‘Most-Favoured Nation’ status last year, paving the way
for a radical reorganisation of trade. In 1996, India had
granted Pakistan a similar status, intended to remove
discriminatory higher pricing and duty tariffs.
Pakistan had shown the willingness to move towards a regime
which deepens and diversifies trade with India, on its part has
been working towards visa reforms. Deepening economic engagement
is seen as crucial to establishing lasting peace between the two
The above listed efforts of the GoP will lead to substantial
improvement in exports from Pakistan including textile exports.
Economic policies and plans
Quality of cotton deteriorates because of rough hand picking
and sub-standard ginning. The female pickers remove leaf, shales,
hulls, burrs, grass etc. along with seed cotton. Some foreign
contaminants such as human hair, wool fibres from pickers
clothing and polypropylene fibres from polypropylene bags are
also included in seed cotton during removal from field to the
The process of ginning is also carried out in a sub-standard
manner. The gin-stand huller fronts are not operated
effectively. Hulls are broken up and carried forward with the
lint. Similarly, seed coat fragments are also crushed and
included in the lint. The International Textile Manufacturers
Federation (ITMF) placed Pakistan Cottons under the most
“contaminated description” on the basis of survey conducted in
Clean Cotton Program
In order to promote the production of clean, contamination
free cotton “Clean Cotton Program” has been lunched by the
Ministry of Textile Industry (MINTEX in collaboration with the
Pakistan Cotton Ginners Association (PCGA), Punjab and Sindh
Governments. Pakistan Cotton Standards Institute (PCSI) has been
given a central role in the “Clean Cotton Program” MINTEX
continued this program upto 2008-09. Clean cotton bales procured
under this program are listed in Table 1 on previous page.
It is obvious from the data reported above that the scope of
‘clean cotton program is limited. Due to poor quality of ginned
and even contaminated cottons, the prices of Pakistani cotton,
yarns and fabrics are discounted in the international export
market. Textile industry of Pakistan suffers a loss of about US
$ 1.124 billion per annum on account of contaminated cottons as
per independent estimates.
It is therefore necessary not only to continue ‘Clean Cotton
Program” but also widen its scope and implement it more
effectively so that processes of cotton picking and ginning are
improved, clean contamination free cotton are produced and price
discounts can be avoided.
Rehabilitation of the cotton farmers
As already mentioned about 35 to 40% of the cotton crop has
been damaged in Sindh. Cotton production has declined from 4.5
million bales to about 2.5 million bales. Cotton crop of about
0.5 million farmers has been damaged resulting in financial loss
of about Rs 70 billion!
In order to rehabilitate the farmers in Sindh the President
of Pakistan Mr. Asif Ali Zardari has announced the supply of
free seeds and fertilizers to the farmers of the flood affected
Concept of crop insurance is implemented all over the world
to save the farmers from losses due to natural calamities. In
order to start the insurance of crops in Pakistan Ministry of
Textile Industry should develop the required procedure in
collaboration with the Ministry of Food and Agriculture and
encourage the participation of the farmers. If the crops are
insured, the Insurance Companies will pay up for the losses
suffered by the farmers on account of natural calamities.
Furthermore the Disaster Management Authority should develop
strategy at the Federal and Provincial level for construction of
large number of small dams on priority basis.
A sum Rs 515 billion has been provided in the Budget for the
construction of dams. Small dams can be used for storage of
water in case of future floods and heavy rains and damage to
crops can be prevented.
Importance of the textile industry
The textile industry is the back bone of the economy of
Pakistan. The textile industry exports contribute about 9% of
the Gross Domestic Product (GDP) and employs 46% of the total
labour force of the manufacturing sector. Textile and clothing
exports are about 58% of the total exports from Pakistan.
However, the textile industry of Pakistan is facing crisis,
such as Electricity and gas load - shedding, unsatisfactory law
and order situation, terrorism and target killing and high cost
of doing business are some of the problems being faced by the
textile and other industries.
Foreign importers of garments are unwilling to visit Karachi
to check the quality of garments offered for sale. Instead they
suggest Dubai, Colombo and Dhaka as places for such visits. It
is also reported that the industrialists are considering
shifting of their production facilities to Bangladesh, Sri-Lanka
and other countries. It is therefore extremely urgent that the
problems being faced by textiles and other industries as
mentioned above are solved by the GoP on priority basis so that
the industries continue to contribute to the economy of
Indian trade delegation visit to boost bilateral trade
Dr. Mirza Ikhtiar
Baig, Federal Advisor on Textile, Government of Pakistan
welcomed the Commerce Minister of India Anand Sharma visit
to Pakistan with 120 businessmen from India and said it will
boost the bilateral trade.
accompanied the Commerce Minister of Pakistan to Delhi with
large Pakistani businessmen delegation and was agreed that
the two sides will sign some agreement to remove non tariff
barriers hampering the trade between the two countries. Dr.
Baig informed that the three agreements signed for promotion
of Pak-India trade are: Agreement of cooperation in custom
matters, recognition between the quality and inspection
agencies – Pakistan Standards & Quality Control Authority (PSQCA)
and Bureau of Indian Standard (BIS) to formalize mechanism
to harmonize standard of export goods and redressal of trade
Minister Anand Sharma said that the trade cooperation
between Pakistan and India will bring prosperity and growth
in the region. Both countries have decided to resolve their
bilateral issues through dialogue including disputes over
Kashmir and water. He said our target is to move forward
fast to achieve the trade target of US $6 billion within
bilateral trade is $2.7 billion per annum with major export
surplus in favour of India. He also said that it is the time
to stop trade between India and Pakistan via third country
like Dubai and Singapore. He also announced opening of
second gate of Wagah Border by 30th April 2012 to facilitate
the land route trade between the two countries.